How to Open a Pawnshop

Pawnshops, or pawnbrokers, give out loans for various items that they keep for a contracted period of time. The person who pawned the item then pays the pawnshop owner back after a certain amount of time, with interest. If the person can't pay the pawnshop back in time, the pawnbroker offers the collateral item for sale. Open a pawnshop to get a piece of the action.

Instructions

Difficulty: Moderate

1. Check state laws before you decide to open a pawn shop. Every state has slightly different laws about pawn shop practices and procedures. Go to the National Pawnbrokers Association website for links to more information. Pawnbrokers require a state license and certain items, such as firearms, come under federal regulations.
2. Acquire sufficient capital to open your shop. Since a pawnshop lends money to people, it abides by strict laws like financial institutions. A beginning pawnbroker needs to show the state and customers who offer their collateral for loans that they have sufficient capital.
3. Open your pawn shop on friendly terms with the other stores and businesses on the street. Pawnshops have gotten a bad reputation over the years, but that's changing, as many pawnbrokers now open up shop in better neighborhoods and attract middle-class clientèle. Keep your storefront clean and clear of derelicts and loiterers.
4. Verify the identity of people pawning goods to guard against stolen items being passed off to your shop. In California, all pawned item have to be checked with the National Crime Information Computer (NCIC).
5. Utilize the Blue Book and other price guides to set rates for pawned items. Keep in mind that you'll receive a multitude of different items, so study up on the market value of musical instruments, coins, jewelry and electronic items like DVD players and iPods.